Marketers warned over online endorsements after CMA probe

Dan and Phil: vloggers' YouTube ad was banned by ASA in 2014
Dan and Phil: vloggers' YouTube ad was banned by ASA in 2014

Marketers have been warned to make it clear that online endorsements are paid-for ads after an investigation by the Competition and Markets Authority.

The CMA’s investigation found that Manchester-based marketing agency Social Chain arranged for social media personalities to promote films, games and takeaway apps without readers being told the content was paid-for advertising.

Social Chain accepted that the ads, which were posted on Twitter, YouTube, and Instagram, may have been difficult for readers to distinguish from other posts they appeared alongside. 

The CMA said Social Chain ran 19 marketing campaigns that involved undisclosed advertising between March and July 2015.

In a letter to 15 businesses and 43 online influencers involved in the campaigns, the CMA warned them that publishing advertising not clearly labelled as such may result in them breaching consumer protection law.

In a separate investigation, the CMA found knitwear retailer Wool Overs had "cherry-picked" more favourable customer reviews for publication on its website. Wool Over staff were instructed to approve only a selection of reviews and none below four stars.

The findings come weeks after the International Consumer Protection and Enforcement Network published new guidelines on online reviews and endorsements.

Nisha Arora, senior director for consumer enforcement at the CMA, said: "Social media personalities can have an important influence on people’s views, especially young people. It is therefore crucial that when people decide what to buy, they should not be misled by adverts on social media that read like independent opinions.

"Businesses, marketing companies and authors of online content all need to play their role in ensuring that advertising is clearly labelled as such."

Last year the Advertising Standards Authority said it wanted to create clearer guidelines for vloggers and brands after it banned a YouTube ad in 2014 for Oreo by vloggers Dan and Phil, who did not make clear that they were being paid by Mondelez to make a video about a "lick race".

A spokesman for Social Chain said: "When the CMA first contacted Social Chain in March 2015, Social Chain was a start-up team of six. Over the last year Social Chain has expanded into four markets globally with a team of 80+. Key hires include a team of directors from other leading marketing and social agencies and a Compliance Officer, guaranteeing all our work complies with advertising regulations. 

"Social Chain is looking forward to continue educating our clients on advertisings rules and regs, and pathing the way in social media marketing.'

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